Health Exchange Premium Hikes Projected for 2015

PricewaterhouseCoopers (PwC), a world leader in consulting and actuarial services, has just released data that projects an aggregate average increase of 7.5 % in 2015 for healthcare premiums purchased on state and federal healthcare exchanges. Their projection is based on data collected from 24 states and the District of Columbia. [1] Examples from a decrease of 23% in Arizona to an increase of 36% in Nevada, with an average monthly premium of about $384 (without government subsidies). PwC notes that some states are only reporting 2015 premium data to date, or only reporting the percentage of rate change without providing actual premium data. Full data from many of the states with the biggest populations - including California, Texas and Florida -- are incomplete but expected to be available by this fall.[2]

Who Is Affected?

The vast majority of Americans still get their healthcare though employer-sponsored group plans. The state- and federally-operated health exchanges (HIX) primarily serve the individual market, which includes the self-employed and those who work for companies that don’t offer employee-sponsored health insurance.

What’s Driving Healthcare Premium Increases?

Originally under provisions of the Affordable Care Act (aka, ACA and Obamacare), out-of-pocket costs in 2014, including deductibles and co-payments, weren’t to exceed $6,350 for an individual plan and $12,700 for a family (whether or not you consider those caps affordable is up to personal interpretation). However, federal officials granted a one-year grace period to some insurers that allowed them to set higher limits or no limits for the first year of full implementation.[3]

As Avik Roy noted in an article on Forbes.com, published in August 2013, “There’s no such thing as a free lunch. If you ban lifetime limits, and mandate lower deductibles, and cap out-of-pocket costs, premiums have to go up to reflect these changes.”[4] Roy went on to say that those limits affected both individual-market healthcare plans and employer-sponsored coverage. As of this January (2015), all qualifying health plans are required to limit out-of-pocket costs to government-mandated levels. Unless another delay or waiver is forthcoming, the tab for the “free lunch” cap on deductibles and co-pays will be picked up by consumers on the front end and taxpayers on the back end.